CMC Markets’ Artur Delijergijevs sheds light on the increasing demand for metals, particularly gold, and the challenges posed by volatility in today's trading environment. In an exclusive interview at iFX Dubai, Delijergijevs, Head of Systematic Market Making at CMC Markets, explains how hedging, opportunistic trading, and execution strategies are evolving in response to market shifts.
Rising Demand for Metals Amidst Volatility
Delijergijevs observed a surge in demand for metals, noting that both retail and institutional clients are flocking to safe-haven products like gold. Rising prices and geopolitical instability, such as trade tariffs and shifting policy expectations, are fueling interest in the metals market.
"Retail clients and institutional clients are flooding the metal markets, fleeing to so-called safe-haven products," said Delijergijevs.
He also pointed to significant gold ETF inflows as an indicator of the growing demand. This heightened demand, both in physical metals and ETFs, reflects the risk sentiment of investors, who are seeking refuge in assets traditionally considered stable during uncertain times.
Is Gold Still a Safe Haven?
Delijergijevs raised an important question about gold’s status as a safe-haven asset in today’s market:
"I don’t think so. I mean, what safe-haven asset moves 10% a day?"
Despite gold’s strong performance over the past couple of years, Delijergijevs highlighted that the volatility in gold prices challenges its traditional role as a safe haven. The geopolitical environment, central bank rate changes, and policy direction are the key factors determining whether gold will continue to perform well.
"It all depends on what’s going to happen with the policy, the central bank rate changes, and most importantly, probably for gold, geopolitics."
Delijergijevs also pointed to the political climate as a trigger for volatility, citing the potential for new geopolitical tensions.
Increased Hedging and Opportunistic Trading in Volatile Markets
The interview revealed that market volatility naturally leads to an uptick in hedging activity. Delijergijevs noted that as markets fluctuate rapidly, traders are compelled to hedge exposures to manage risks. At the same time, volatility also presents opportunities for opportunistic trading, as some traders aim to capitalize on sharp price movements.
"Certainly in volatile times, we see a lot more hedging activity from our clients," Delijergijevs stated.
In fast-moving markets, exposures can change quickly, forcing desks to adjust positions in real-time as market conditions evolve.
How Market Makers Prepare for Stressed Markets
For market makers like CMC, preparation is key during periods of high volatility. Delijergijevs explained that during economic events and major announcements, the team ensures that systems and pricing are optimized to handle sudden moves in the market.
"Around specific key economic events and announcements, we prepare our systems, we prepare our pricing."
During volatile periods, CMC's focus is on maintaining consistent pricing and execution quality, despite changes in spreads and commercial terms.
The Hybrid Model: Combining Electronic Execution with Human Support
While electronic execution remains the backbone of modern trading, Delijergijevs emphasized the importance of human relationship management during volatile times. He highlighted that while electronic execution ensures speed and consistency, human support is crucial when clients require context, connectivity assistance, or need to execute large volumes under pressure.
"Something goes wrong, and you’re trading electronically, you want to be able to pick up a phone and call someone on the other side."
The Role of AI in Market Making
Delijergijevs also spoke about the role of artificial intelligence (AI) and machine learning in CMC Markets’ operations. These technologies are being integrated into key areas such as risk management, pricing, and automating routine tasks.
However, Delijergijevs acknowledged that while AI can optimize operations, it is unlikely to replace human decision-making anytime soon, especially during stressed markets.
"I don’t think AI and machine learning models will replace human decision-making anytime soon, especially in instances of stressed markets."
Instead, AI is used to streamline operational tasks, freeing up more time for teams to engage in high-value client interactions.
Dubai: A Strategic Location for Global Coverage
Delijergijevs also highlighted the strategic importance of Dubai as a global trading hub. He pointed out that Dubai’s position allows seamless coverage across trading sessions between Asia, Europe, and the US. This global connectivity ensures CMC can provide comprehensive market coverage throughout the trading day.
